This Stock Is Among The Best Ways To Play Natural Gas

Earlier this month, Diversified Energy Company PLC DEC completed the acquisition of certain assets of Oaktree Capital Management.

The stock price represents "an attractive entry point," given the company's high free cash flow yield, fixed dividend, and upcoming addition to the Russell 2000, according to Truist Securities.

The Diversified Energy Company Analyst: Bertrand Donnes initiated coverage of Diversified Energy Company with a Buy rating and price target of $18.

The Diversified Energy Company Thesis: The company has a track record of shareholder returns and is now trading on both the NYSE (New York Stock Exchange) and LSE (London Stock Exchange), Donnes said in the initiation note.

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"Additionally, relative to its E&P peers, the company has a much lower base production decline (~10% y/y vs the group’s 30-50%) as a result of its older vintage producing inventory and its operated workover program, versus the high-decline D&C activity others use to drive growth," the analyst wrote.

Diversified Energy also has a track record of acquisitions and may jump in the foray "as the swarm of M&A in the E&P space produces potential opportunities through accelerated non-core divestiture programs," he added.

While investors try to identify the "best way to play natural gas in a period of potential demand growth," there is a lack of options compared to the broader oil focused sector, Donnes further stated.

DEC Price Action: Shares of Diversified Energy Company had declined by 1.30% to $1,061.00 at the time of publication on Tuesday.

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